(Bloomberg) -- Crude dropped below $60 a barrel for the first time this year as the worst collapse in equities in years compounded concern that unprecedented supply growth from U.S. oil fields will overwhelm demand.
Futures tumbled as much as 2.4 percent on Friday in New York, on track for its steepest weekly decline in almost a year. A global index of more than 1,600 stocks limped toward its most painful weekly result since 2011 as investors fled riskier asset classes. American crude output is soaring so fast that the U.S. is on the verge of elbowing Saudi Arabia and Russia aside as the dominant supplier.
“The supply backlash that we have been expecting in the U.S. because of higher prices became very real in the market psyche,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London, said by telephone. Oil is also being buffeted by “ripple effects from the risk-off move in equity markets.”
Traders who divine market momentum from charting and technical signals were closely watching New York crude’s 50-day moving average because a settlement below that level for several days in a row would be regarded as bearish.
Oil in New York has tumbled 7.4 percent so far this month. Even as the Organization of Petroleum Exporting Countries and Russia curtailed output to prop up prices, production has continued escalating in the U.S.
West Texas Intermediate crude for March delivery slid $1.24 to $59.91 a barrel at 10:42 a.m. on the New York Mercantile Exchange.
Brent for April settlement declined $1.08 to $63.73 on the London-based ICE Futures Europe exchange.
U.S. production surged to 10.25 million barrels a day last week, according to government data released Wednesday and is forecast to top 11 million a day this November, a year earlier than previously expected.
Other oil-market news:
- Gasoline futures fell as much as 2.6 percent to $1.7197 a gallon, the lowest since December.
- China will end a 25-year wait as yuan oil futures start trading on March 26. They will include seven deliverable grades of oil.
- The Forties Pipeline System hasn’t returned to full operating levels following a halt on Feb. 7, according to a person familiar with matter, who asked not to be identified because the matter is private.